You are here

HSBC wins reversal of US$2.46b Household judgment

Friday, May 22, 2015 - 07:21

A US appeals court on Thursday reversed a US$2.46 billion judgment against HSBC Holdings Plc in a long-running securities fraud class action stemming from a consumer finance business it bought more than a decade ago.

PHOTO: REUTERS

[CHICAGO] A US appeals court on Thursday reversed a US$2.46 billion judgment against HSBC Holdings Plc in a long-running securities fraud class action stemming from a consumer finance business it bought more than a decade ago.

The 7th US Circuit Court of Appeals in Chicago said HSBC and three former Household International Inc executives were entitled to a new trial over whether "firm-specific, nonfraud factors" contributed to the stock price decline that was the basis for the shareholder lawsuit, which began in August 2002.

"As things stand, the record reflects only the expert's general statement that any such information was insignificant,"Circuit Judge Diane Sykes wrote, referring to an expert witness for the plaintiffs, law professor Daniel Fischel. "That's not enough."

The three-judge appeals court panel also said the former Household officials - Chief Executive Officer William Aldinger, Chief Financial Officer David Schoenholz and consumer lending president Gary Gilmer - deserve a new trial over their alleged liability for making false statements.

HSBC spokesman Rob Sherman said the British bank has long argued that "the verdict was defective and needed to be reversed, and the court of appeals has now agreed. We look forward to the new proceedings." Michael Dowd, a partner at Robbins Geller Rudman & Dowd representing the plaintiffs, did not immediately respond to requests for comment.